Taguchi Testing:
Double your e-newsletter conversions
By Adam Ramshaw (Director)
For reprint permission please email
info@genroe.com.au
If you’re really interested in using your e-newsletter to add value then you’re
probably already measuring it in terms of conversions. You might be calling
those conversions opening rate, click-through rate, seminar signups, sales,
whitepaper downloads or a range of other metrics. Regardless of how you measure
conversions you’re almost certainly trying to improve your results and testing
is the only way to consistently do that.
What’s more, if you’re like most people you’d be happy to improve those
conversions a few percentage points on each e-newsletter. Well, what if there
was a way to double or triple the number of conversions you receive?
Impossible?
There is way and the secret is to vastly improve your ability to test
e-newsletter elements efficiently and effectively. The way to do that is
Taguchi design.
As a case study let’s consider putting a sales panel in your next e-newsletter
to promote a new product or service. In trying to maximise conversions you have
lots of options that you could test. You could test different subject lines,
panel on left or right, top or bottom of newsletter, different panel headline,
different panel images and different features promoted.
To do the testing direct marketers would traditionally have performed split
mailings. That is, they would create a different test panel for each version of
each option. Then send each different test panel to a different test cell
before finally comparing results and selecting the best for the final mail-out.
The trouble with this approach is that the number of different test panels
needed rapidly gets out of hand. Even for this simple case, if we assume two
versions of each option, we need to create 64 (2 x 2 x 2 x 2 x 2 x 2) test
panels and have 64 test group cells. Even if you have enough test groups
available, the time and effort to coordinate the process is very high.
Enter a new, old, approach. For many years engineers have had similar issues
when trying to optimize manufacturing processes. For instance, what is the best
combination of speed, pressure and temperature to achieve a specific thickness
of metal coming out of a rolling machine? Rather than testing all of the
possible combinations, engineers often use an approach called Taguchi design
were you only test a few, carefully selected, versions and combinations. Using
the results from these tests you can determine the best combination of all the
versions of all the factors.
In our example that means rather than needing 64 test groups and test panels you
could get away with as few as eight. Where’s the catch I hear you ask – well it
has to do with the interaction of options. With just a few test cells you don’t
get very much information on how headlines interact with locating the box on
the left or the right. In many marketing cases the interactions between options
is minimal so it is often not an issue.
On the upside, using Taguchi designs means you can substantially reduce the cost
and complexity in testing a variety of marketing initiatives. Suddenly a test
that appeared impossible (we just don’t have enough recipients to test 64
groups) becomes quite possible.
The other advantage of using this approach is that in the process of determining
the optimal mix you also collect information on which options impact have the
largest impact on the conversion process. In the next campaign you can then
focus your time and effort on getting the few important options correct and not
worry about those that have minimal impact on the conversion rate.
Because of the speed and ease with which promotional elements can be changed
this approach has many applications the e-marketing world. Taguchi can
effectively be applied to web site conversion optimization, banner
advertisements, email campaigns, pay per click (PPC – e.g. Google Adwords
campaigns) advertising and e-newsletters, as discussed here.
When used effectively the results from this approach can be enormous. For
instance one campaign for a major technology vendor resulted in 5.3 times the
number of e-newsletter openings and 7.1 times the number of sales as the
non-optimized newsletter. Used in a customer survey environment for a consumer
product the best combination of options garnered 3.5 times as many responses as
the worst combination.
So ask yourself: what would doubling the response rate for your next sales
focused e-newsletter mean and think about whether you too should be using
Taguchi designs.
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